Tuesday, April 4, 2017

Marvel’s “Iron Fist” Is Weaker than the Invisible Hand of the Market

Contains "Iron Fist" spoilers.
Following Netflix’s captivating TV shows Daredevil, Jessica Jones, and Luke Cage, and set within the same Marvel Cinematic Universe, Iron Fist disappoints with a mediocre story, which has led to widespread negative critic reviews. Like most Marvel fans, I probably enjoyed the show more than critics but still felt underwhelmed with its story.Iron Fist neglects how businesses have incentives to innovate.
In particular, the show reflected a poor understanding of economics, business and the law of unintended consequences.
In Iron Fist, after a plane crash fifteen years earlier, Danny Rand
returns to New York City as Iron Fist and seeks to crush his arch-enemy,
the evil organization the Hand. In Daredevil, the Hand reveals itself
to be depraved, enslaving people and willing to wage war with a ninja
army. In contrast, despite cult-like behaviors, kidnappings and murders,
Iron Fist’s central indictment of the Hand is that the black-market
organization seeks to mass produce and sell heroin. The Hand has
infiltrated Danny’s company, Rand Enterprises, to use its resources to
promote illegal heroin trafficking.
With no characters questioning the desirability of heroin’s
illegality, Iron Fist presents a drug cartel as its supervillain. By
doing so, it neglects how businesses selling products, including drug
cartels selling heroin, have incentives to innovate and create better
societies because their profitability depends on consumers choosing to
purchase their products.

Overall, if Iron Fist had not intervened, the Hand, as if guided by an invisible hand,
would have produced widespread socially beneficial results through its
heroin business in a way that, in the long-term, would have undermined
the sustainability of its criminal enterprises.Innovation in the Heroin Market
To earn a lot of money selling to heroin users, the Hand produces a
new, innovative form of heroin. Unlike existing heroin, the Hand’s
heroin prevents people from building a tolerance towards it, making each
use feel just like a heroin user’s original use. Moreover, people use
the Hand’s heroin like a temporary tattoo, requiring them to stamp it on
their arm without the need for a syringe. The Hand believes its heroin
can take over the heroin market because the innovative experience and
method for using it make it uniquely desirable to drug users.
Every character in the show presents this innovative heroin as
socially harmful. Yet, as presented, the Hand’s heroin seems less
harmful than existing, normal heroin and solves serious social problems.
Currently, intravenous drug users contract diseases
like HIV/AIDS, Hepatitis C and similar diseases at particularly high
rates because they share syringes, facilitating the spread of these
diseases. For some numbers describing the harm from dirty needles:

An estimated 50 to 60 percent of New York City’s 200,000 to 250,000
needle-drug addicts have already been infected, and AIDS was their
leading cause of death by 1985. Today, as an official at the Federal
Centers for Disease Control told me, "Dirty needles are the way the
virus is spreading."
Infected addicts, in turn, transmit the virus to their sexual
partners, a process already responsible for the overwhelming majority of
non-Haitian heterosexually transmitted AIDS cases . . . Dr. André
Nahmias of Emory University said that nearly all of the AIDS-infected
infants born in the United States, estimated at between 2,000 and 4,000 a
year, are the offspring of i.v. drug users.

The criminalization of drugs has made it difficult to access clean syringes, making the drugs more dangerous.
Thus, in Iron Fist’s setting of New York City, over half of
existing intravenous drug users have been infected with diseases,
largely from dirty syringes. After their infections, they spread the
diseases to their sexual partners and, sometimes, newly-born infants.
Particularly
in the United States, governmental criminalization of drugs has often
also made it difficult to access clean syringes, making the drugs more
dangerous and easier to spread. As in many other ways, the drug war
makes drug use more dangerous and compounds drug problems by making the
use of dirty needles much more widespread than if drugs were legal.
With the government making heroin use more dangerous and the frequency of conveniently sharing needles
regardless of the accessibility of clean needles, the Hand’s innovative
heroin solves a major social problem—the spread of diseases among
intravenous drug users. Through the Hand’s product, heroin users could
easily protect themselves from now commonly spread diseases by using
heroin like a clean tattoo, ending the danger of dirty needles. By
providing a higher quality, safer product, the Hand’s innovative heroin
would save many lives and reduce a lot of misery.
Additionally, the Hand creates a second, unambiguously wonderful
innovation in the heroin market: a cure for heroin addiction. Though
heroin addiction may be caused by social factors in addition to biological ones, the Hand produced a drug people can use to end their heroin addictions.
For some reason, Iron Fist depicts a cure for heroin addiction as
cruel, manipulative, and evil. After the Hand loses its grip on Rand
Enterprises and Harold Meachum seeks to copy the Hand’s business model,
Harold in a villainous depiction remarks:
“Either way heroin's a big money-maker, Ward. Oh, not to mention that
cure your, uh, buddy Bakuto has. Now we'll get rich both ends.” Thus, in
Iron Fist, evil people make money by both selling a demanded product
and a cure for its side effects.
Without explanation, no character in Iron Fist marvels at the amazing
medical discovery. Heroin primarily ruins people’s lives when the
addiction eventually destroys them. By innovating a solution to heroin
addiction, the Hand transforms heroin into an expensive pleasure without
the harmful side effects, solving many of the other harms of heroin.The Hand’s Heroin Market
Imagine this hypothetical alternative reality: Danny dies in his
plane crash and never returns to New York City as Iron Fist, no other
superheroes or government organizations intervene to stop the Hand’s
heroin trade, and the Hand's plot succeeds. How would the world have
looked?
In this alternative reality, the Hand starts mass producing its
heroin. With its better quality and easier use, heroin addicts choose to
purchase the Hand’s innovative product instead of their existing
heroin. Immediately, the rate at which diseases like AIDS spread among
heroin addicts falls substantially because, without needing syringes,
heroin addicts stop endangering themselves with potentially dirty
syringes.The Hand’s heroin solves major social problems and will likely not cause other problems.
With respect to addiction rates and other harms, Iron Fist does not
provide clarity on the likely effects. The only character who provides
insight into the withdrawal symptoms, Ward Meachum, also suffers from a
severe prescription drug addiction and other psychological problems,
making his state following his use and withdrawal of heroin unhelpful in
measuring the effect of the heroin alone. Addiction rates may actually
fall following the introduction of the Hand’s heroin because, without
building a tolerance, heroin addicts would not need to continually have
more and more heroin to achieve the same high. As ambiguous, the
evidence of the Hand’s heroin spreading to existing non-addicts is
limited to a handful of unseen anecdotes, making the real effect
difficult to judge.
With this ambiguity, suppose for a short time that addiction and use
rates likely increase because of the drug's increased potency and
appeal. After being on the market for around a year, the number of
addicts and deaths may increase a little but probably not much as the
initial appeal of a new kind of heroin wanes. General trends in use,
like the sudden substantial increases
in heroin deaths in recent years unrelated to any new kind of heroin,
probably continue to overwhelm the effect of the Hand’s product in
determining use, addiction and death rates from heroin. Thus, a year or
so from the Hand’s mass production spreading, the Hand’s heroin trade
almost definitely solves the major social problems involving dirty
syringes and may, but likely will not, cause notable other problems.
Shortly after releasing its new heroin, the Hand secretly provides
Rand Enterprises with a cure, allowing it to make money both from the
distribution of heroin and the cure of the addicting effects. Thus,
seemingly miraculously, Rand Enterprises announces to the world that it
has a cure for the new heroin outbreak.
Unfortunately, a powerful supervillain stops the Hand from curing heroin addictions. After spreading disease
among Americans from its earliest years, the Food and Drug
Administration (FDA) prevents Rand Enterprises from curing heroin
addiction. To overcome this supervillain, Rand Enterprises spends around
ten years and hundreds of millions of dollars
to get its cure for heroin addiction approved by the FDA. While black
markets would have quickly spread the cure, the legal method takes
around a decade and a significant amount of money. With such
governmental obstacles, the Hand needed a huge corporation like Rand
Enterprises for its plan.To address the immense regulatory cost, Rand Enterprises receives a twenty-year patent on the cure.
In the meantime, despite the Hand’s best efforts to provide consumers
with both unusually safe to use heroin and an off-switch to the harmful
side effects, the federal government prevents the Hand from mass
producing the off-switch and cruelly condemns heroin addicts to
unnecessary suffering for about a decade. Over this course of time, the
Drug Enforcement Agency (DEA) and state governments continue to mass
incarcerate drug users. As Danny Rand realized when one of the
government’s 80,000, primarily drug-related, SWAT raids per year wrongly targeted him for drug trafficking, the police officers perform their raids in military gear that makes these warrior cops largely indistinguishable from the Hand's soldiers. Thus, the federal government continues to arrest hundreds of thousands
of people for heroin offenses and to spread suffering to many more by
both denying sick people a cure for their addictions and then arresting
these sick people for not having found a different way of addressing
their addictions. Relatively wealthy and well-connected people likely
find black market access to the cure to heroin addiction in one way or
another, while the other heroin addicts suffer.
After ten years, the FDA approves Rand Enterprises' cure for heroin
addiction. To address the immense regulatory cost, Rand Enterprises
receives a twenty-year patent
on the cure, preventing competitors from also selling it. With
restrictive medical competition and with healthcare and health insurance
regulations, Rand Enterprises charges considerably above cost
for their drug. With its legalization, heroin users pay high costs for
both illegal, black market heroin and for the cure to heroin addiction.
(Or maybe with highly regulated health insurance regulations, the high
cost of Rand Enterprises’ drug is spread across the public as a whole
through higher health insurance premiums). With the Hand's involvement
in Rand Enterprises, the government’s competitive restrictions bolster
the Hand’s finances for twenty years.As if Crushed by an Invisible Hand
Up to now, the government’s criminalization of heroin has prevented
the Hand’s potential competitors from selling legal alternatives.
Moreover, the FDA and patent process have prevented competitors from
selling and reducing the price of the cure for heroin addiction. Beyond
this point in time, the government handout for the Hand starts to lose
its grip as the law of unintended consequences and the invisible hand of
the market begins to crush the Hand’s finances more effectively than an
iron fist.With heroin’s legalization, the Hand's black
market financing would be crushed by its more economically efficient
legal competition.
With Rand Enterprises’ release of a cure for heroin addiction, the
public has a public policy epiphany: If heroin addictions can be cured
instantaneously and painlessly, why should heroin be illegal? The public
begins realizing that a momentary pleasurable use of heroin without
side effects is just an expensive habit, not something to be
criminalized. Whatever justifications people had for outlawing heroin
before Rand Enterprises’ miracle drug, curing heroin addictions
fundamentally changes people’s minds.
The public policy change begins slowly. Just as recent majority support for legalizing marijuana
has yet to cause this change nationwide, a cure for heroin addiction
does not immediately cause the legalization of heroin. The first state
legislature to legalize heroine probably takes five to ten years to do
so. For better or worse, the state legislature figures out how it would
like to regulate heroin sales. The regulations prevent people under 18
or 21 from legally buying heroin, impose very high taxes on its sale, and impose many other restrictive regulations. Perhaps politicians require the bundling
of heroin with the drug that cures its addition, forcing legal
purchasers to buy both together. After a handful of States legalize
heroin and determine how to address political concerns and priorities,
the rest of the States copy their framework after another ten or so
years in a surprisingly quick cluster of legalization, culminating definingly with federal legalization.
Due to these public policy changes, the DEA and similar state
agencies stop regularly ruining people’s lives with their
criminalization of heroin. The warrior cops scale back.
Moreover, with heroin’s legalization, the Hand's black market
financing begins getting crushed by its more economically efficient
legal competition. Just as Mexican drug cartels struggle against legal marijuana producers,
the Hand has difficulty competing against legal businesses, and the
invisible hand of capitalism starts dwindling the Hand's resources.
Through Rand Enterprises, the Hand now relies financially on its patent
for curing heroin addiction.
After its twenty-year term, the Hand’s patent expires. Though the
Hand could use political pressure to continue restricting competition,
at some point, the patent’s expiration facilitates the production of
generic cures for heroin addiction, substantially reducing the selling
price. To the extent not already widely accessible to poorer people,
these affordable generic cures bring an end to heroin addiction.
Competition substantially reduces the price of Rand Enterprises’ drug
and largely bankrupts the Hand.
As one of the Hand's leaders, Bakuto, says,
"The world we live in now is run by corporations, not governments."
Without Iron Fist and after overcoming governmental barriers ,
corporations guided by an invisible hand destroy the Hand where it
matters—at a financial level.The Iron Fist of Government Protects Drug Cartels
In the words
of Nobel prize-winning economist Milton Friedman: “See, if you look at
the drug war from a purely economic point of view, the role of the
government is to protect the drug cartel. That’s literally true."Though unintended, the Hand’s black market business practices would have solved serious problems.
Over the course of Iron Fist, the Hand engages in many indefensibly
evil acts, such as kidnapping and threatening the daughter of the
chemist who made the innovative heroin to force him to work for the
Hand. Yet, the most villainous organizations that, if possible, Danny
would have been a true hero for destroying were the DEA, the FDA and the
other government organizations that restrict competition to makes the
Hand’s evil black market methods financially profitable. The
government’s war on drugs and its regulatory agencies protect the Hand
from competition and bolster the Hand’s drug cartel enterprise, making
it lucrative.
As economic reasoning shows, the Hand’s intentions to make money
through heroin sales diverge sharply from the unintended consequences of
its actions. Though unintended, the Hand’s black market business
practices would have solved serious problems among current heroin users
and fostered social policy changes to reduce the heavy hand of the
state. By stopping the Hand’s heroin trade, Danny prevented the Hand
from solving these serious social problems and from unintentionally
ending the war on drugs (at least with respect to heroin).
Therefore, with its poorly considered underlying economic reasoning,
Iron Fist’s plot disappoints by depicting heroin trafficking as the
Hand’s principal evil and presupposing without question that heroin
should be illegal. Without Danny Rand’s Iron Fist and freed of the
government’s iron fist, the invisible hand would have saved the day.